Procurement Terminology

ACCEPTANCE OF GOODS OR SERVICES:Acceptance constitutes a determination by an authorized government official that goods or services conforming to the requirements of a contract have been furnished by a contractor and that a contractor is entitled to payment under the contract. With respect to goods, acceptance is deemed to occur if, after a reasonable opportunity to inspect the goods, an effective rejection is not made within a commercially reasonable time. Acceptance of goods may be revoked where: there is an acceptance on a reasonable assumption that a non-conformity would be cured and it is not later timely cured; or acceptance has taken place without discovery of a non-conformity where the acceptance was induced either by the difficulty of discovery before acceptance of the non-conformity or by the contractor's assurances with respect to conformity of the goods. Revocation of acceptance must occur within a reasonable time after the government official discovers or should have discovered the grounds for it.
ACCEPTANCE OF OFFER : A communication directed to an offeror by an authorized contracting officer in response to a specific offer. In order for this communication to become binding on the County, a fully executed contract must be delivered. The communication of acceptance of an offer must be made within the time specified for acceptance in the solicitation or authorized extension in order for the acceptance to be binding on the offeror; however, a communication of an acceptance of an offer made after the time specified in the solicitation may be accepted by an offeror.
ADVANCE PAYMENT: A payment to the contractor prior to receipt by the County of contractor performance that is at least equal in value to the amount of the payment.
ASSIGNMENT: The transfer of a contract right or obligation by a contractor to another party. A payment assignment is the assignment of a right to payment under a contract to a party designated by the contractor who has a right to that payment. A performance assignment is the assignment by a prime contractor to a third party of the obligation to perform a prime contract in accordance with its terms and conditions. Assignments must be made through a contract modification and specifically accepted and approved by the contracting officer in order to be effective. An assignment, unless it specifically provides otherwise, does not relieve the prime contractor of its obligations to the County.
AUTHORIZED GOVERNMENT OFFICIAL : A person granted specific authority to do a particular act by law, by delegation of authority, by official job description, by the law of agency or pursuant to contract provisions.
AWARD : The release of a fully executed contract to an offeror. This release may be accomplished by a contracting officer by depositing the contract in the mail, with a common carrier, delivering it to the offeror, or notifying the contractor by phone, telegram or other means which communicates acceptance of offer by the County.

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BID : An offer to furnish goods, services, or construction in conformity with the specifications, delivery terms and conditions, and other requirements included in the invitation for bids; or, in the case of disposition of County property, an offer to purchase.
BID BOND : An insurance agreement in which a third party agrees to be liable to pay a certain amount of money in the event a bidder fails to sign a contract as bid or as mutually agreed upon presentation of that contract to the bidder.
BID DEPOSIT : A cashier's check, certified check, bank letter of credit, or bid bond, deposited with, and at the request of, the County, to guarantee that the bidder will, if selected, sign the contract as bid or mutually agreed upon presentation of that contract to the bidder. If the bidder does not sign the contract as bid or as mutually agreed, the deposit may be retained by the County.
BIDDER : See Offeror.
BIDDER'S LIST : A current file of vendors and other sources of supply for various categories of goods, services, or construction purchased for County use maintained by the Director.

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CAO : The Chief Administrative Officer for Montgomery County.
CERTIFICATION OF FUNDS : A written or electronic certification by the Director of Finance that funds are available to pay the cost of a specific contract or the cost of the first term of a multi-term contract, as required by Chapter 11B, Montgomery County Code.
CHANGE ORDER : An order authorized by the contracting officer directing the contractor to make changes within the scope of the contract, pursuant to contract provisions for such changes, with or without the consent of the contractor.
CLAIM : A demand or request for payment for services or construction rendered or goods delivered, outside of an appropriately encumbered contract with the County, for which the contractor has a basis for payment, reimbursement, or compensation from the County under Chapter 11B, Montgomery County Code. See also related definition in Section 14.2.1.
COMPETITION : The process by which more than one valid source of supply for goods, services, or construction is solicited through the submission of offers which are to be evaluated in a comparative way for the purpose of selection of the source or sources most advantageous to the needs of the County.
COMPETITIVE NEGOTIATION : A process by which the County and one or more prospective suppliers communicate successive respective positions with respect to price, specifications, and other relevant terms and conditions in order to arrive at a contract for procurement of goods, services, or construction. Competitive negotiation may occur after required bidding or solicitation of proposals produces no award because of a deficiency in: proposed specifications, price, insufficiency of available funds, non-responsiveness, adequate competition, or responsibility factors. The Director must approve competitive negotiation before it can be used.
CONFIDENTIAL INFORMATION : Any information which is available to an employee only because of the employee's status as an employee of the County and is not a matter of public knowledge or available to the public on request. For purposes of this definition, an employee includes a volunteer.
CONSTRUCTION : The erection, alteration, repair, demolition or renovation (including dredging, excavating, landscaping and painting) of roads, public buildings, structures or other improvements to real property. Construction does not include routine maintenance, operation or repair of existing facilities.
CONTRACT : Any type of documented agreement or order for the procurement or disposal of goods, services, construction or any other item which is binding on the contractor and the County. Unless specifically prohibited by Chapter 11B, contract types include: fixed-price, cost, cost-plus-a-fixed-fee, cost reimbursement or incentive; contracts may provide for the issuance of job orders, task orders, or task letters; contracts also include letter contracts, grants, purchase orders and contract modifications. All contracts must be in writing unless otherwise authorized by these regulations. A contract must include mandatory clauses.
CONTRACT ADMINISTRATOR : An authorized government official charged with responsibility for administering a contract with authority as provided in the contract document.
CONTRACT AMENDMENT : A modification to a contract signed by the contractor as well as the contracting officer which provides for a change of contract provisions, including additional work outside the scope of the original contract.
CONTRACT MODIFICATION : Any documented alteration in the specification, delivery, contract period, price, quantity, or other contract provisions of any existing contract, whether accomplished by unilateral action in accordance with a contract provision (change order), or by mutual action of the parties to the contract (contract amendment). It also includes administrative changes, notices of termination, field orders, and notices of exercise of a contract option and contract extensions. Unless expressly authorized by contract and these regulations, a contract modification must be written if the contract to be modified is written.
CONTRACT REVIEW COMMITTEE (CRC) : A standing committee established for such purposes as specified in law or these regulations.
CONTRACTING OFFICER : The CAO, Director, others delegated by these officials to act within their authority, and other officials specifically authorized by these regulations to enter into a contract on behalf of the County. Only contracting officers may execute contracts or contract modifications on behalf of the County.
CONTRACTOR : Any individual or organization doing business with the County whether for services, construction or for the sale of goods or services pursuant to a contract.
COOPERATIVE PURCHASING : The combining of requirements of two or more public entities in order to obtain the benefits of volume purchases, reduction in administrative expenses, or some other public purpose.
COST ANALYSIS : The review and evaluation of the separate cost elements and proposed profit of an offeror's or contractor's cost or pricing data and an offeror's or contractor's assumptions and judgments in estimating costs from cost data.
COST OR PRICING DATA : All facts as of the time of price agreement that buyers and sellers would reasonably expect to affect price negotiations significantly. Cost or pricing data are factual, not judgmental, and are independently verifiable.
COST REIMBURSEMENT CONTRACT : A contract which provides for reimbursement of a contractor's costs associated with performance of specified contract requirements.
COUNTY : Montgomery County government.
COUNTY DEPARTMENT, OFFICE, AND/OR AGENCY : An officially designated unit of the County (including the County Council) subject to the procurement law and regulations of Montgomery County, including certain entities established by State law such as the County Board of Supervisors of Elections, the State Attorney's Office, the Sheriff's Office, the County Board of License Commissioners, and the Circuit Court (not including the office of Clerk of the Court).
CRC : The Contract Review Committee.

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DEBARMENT : An exclusion for cause by the Director of firms or individuals from eligibility to participate in a procurement action.
DELIVERY ORDER : A document or other action which initiates a delivery of goods, services, or construction authorized by a contracting officer or authorized government official, under an existing contract which establishes terms, price and source of supply.
DEPARTMENT : See Using Department.
DETERMINATION AND FINDING : Documents prepared by an authorized government official which delineates the facts and reasons used for reaching a particular decision.
DIRECT PURCHASE : An informal procurement of goods, services, or construction which is accomplished under the direct authority of the Using Department Head and not by the Director. Competition should be preserved with this method to the extent practical. Contracting with MFD firms is encouraged.
DIRECTOR : Director of the Office of Procurement.
DISPUTE : A timely complaint filed by a contractor disagreeing with a decision made by an authorized government official regarding the contract.

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EMERGENCY : Any dangerous condition or unforeseen curtailment, diminution or termination of an essential service which poses an immediate danger to health, life or property.
EMERGENCY PROCUREMENT : A procurement of goods, services or construction necessitated by any threatened dangerous condition or by a threatened imminent or unforeseen curtailment of an essential service or supply which, if not remedied by a procurement, will endanger or cause damage to health, life or property and which remedy cannot be accomplished through a timely procurement using normal procedures.
ENCUMBRANCE : The recorded reservation of appropriated funds to provide for payment of County contract obligations, which reduces remaining spending authority under an appropriation by that amount. A certification of funds constitutes sufficient evidence from the Department of Finance that there is a sufficient unencumbered balance in an appropriation to cover the amount of a specified contract, or the first term amount of a multi-term contract, as required by Chapter 11B, Montgomery County Code.
EQUAL ("OR EQUAL") : A phrase used to indicate permission to substitute products of similar or superior function, purpose, design, and/or performance characteristics. Substitutability is determined by conformance to salient characteristics.
EVALUATION CRITERIA : Criteria set forth in a solicitation document that specifies the basis for award of a contract.

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FIELD ORDER : A limited and specific written order usually used in construction contract situations where the authority to direct timely limited change to contract work has been specifically delegated by the contract to the authorized government official at the place of performance.
FIXED PRICE CONTRACT : A contract which provides for a firm price under which a contractor bears the full responsibility for profit or loss.
FORMAL SOLICITATIONS : Invitation for Bids, Requests for Proposals and Requests for Expressions of Interest.

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GOODS : Supplies, materials, equipment, and all other tangible commodities, except real property.
GOVERNMENT : Montgomery County Government.
GRANT : An action by a public or private entity which directs funds on a non-competitive basis to a specific entity. A grant must be implemented by a contract.

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INFORMAL SOLICITATION : A procurement accomplished without an invitation for bids, request for proposal, or request for expressions of interest. An informal solicitation is not subject to formal public notice.
INSPECTION : Examination and testing of goods, services, and construction for materials, components, intermediate assemblies, and end items, to determine whether the goods, services, and construction conform to contract requirements. Inspection does not constitute acceptance.
INVITATION FOR BID (IFB) : A formal solicitation in which competitive sealed bids are invited through a public notice procedure which requires that bids be received by a specified time and opened publicly. Invitations for Bids are evaluated solely in terms of bidder responsibility, bidder responsiveness, and price.

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LABOR AND MATERIAL BOND : See Payment Bond
LATE OFFER : An offer which is received at the place designated in the Invitation for Bids, Request for Proposals or Request for Expressions of Interest after the deadline established by the invitation or request. A late offer may not be accepted and must be automatically rejected.
LIQUIDATED DAMAGES : A sum agreed upon between the parties to a contract, to be paid as ascertained damages by the party who breaches the contract, and not as a penalty, where actual damages due to breach may be difficult to determine at the time of the breach.

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MFD : An abbreviation used for minority, female, or disabled owned businesses as defined in Chapter 11B of the County Code
MANDATORY CLAUSES : Clauses prepared by the Office of the County Attorney which must be used in solicitations and contracts unless explicitly waived by the Office of County Attorney.
MANDATORY IFB REQUIREMENTS : Specific substantive requirements or specifications which may not be waived.
MINI-CONTRACT : A contract awarded through documented informal competition for professional services.
MINOR INFORMALITY OR IRREGULARITY : A requirement in a bid which is merely a matter of form (not substance) or is an immaterial or inconsequential provision in the solicitation. The Director may determine the defect or variation in the bid to be immaterial or inconsequential when the significance of the defect or variation as to price, quantity, quality, or delivery is trivial or negligible when contrasted with the total cost or scope of the procurement.
MINORITY OWNED BUSINESS : Any legal entity that engages in commercial transactions which is at least 5l percent owned, managed, and controlled by one or more minority persons and certain non-profit entities organized to promote the interests of persons with a disability, as defined in Chapter 11B of the County Code.
MINORITY CONTRACTING : Montgomery County contracting policies and procedures in accordance with the provisions of Chapter 11B of the County Code.
MINORITY PERSON : A member of a socially or economically disadvantaged group which includes African Americans, Hispanic Americans, Native Americans, Asian Americans, women, and persons with a disability as defined in Chapter 11B of the County Code.
MISTAKE IN BID : A claim by an offeror with respect to an IFB which asserts a mistake with respect to price or cost factors contained in the offer.
MULTIPLE AWARD : The award of separate contracts to two or more offerors for the same commodities or services in situations where the award of a single contract would be impractical or would not meet the total County requirements.

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NOTICE TO PROCEED : A written notice to the contractor issued by an authorized government official directing commencement of contract performance.

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OFFER : A timely response to a solicitation which is binding upon the offeror during the period of time in which the offer is to remain open under the solicitation. An offer is not binding on the County until the award of a contract.
OFFEROR : A person or entity who makes an offer in response to a solicitation or makes an unsolicited offer.

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PAYMENT BOND : A bond issued by a surety which guarantees payment of suppliers and subcontractors of a prime contractor.
PERFORMANCE BOND : A contract of guarantee submitted by a successful offeror to protect the County from loss due to the offeror's inability to perform or complete the contract as agreed.
PRE-BID/PRE-PROPOSAL CONFERENCE : An optional meeting held with prospective offerors prior to submittal of bids or proposals in response to a solicitation to discuss matters germane to the solicitation.
PRICE ANALYSIS : An analysis used to determine that a price submitted by an offeror is fair and reasonable. A price analysis must be made by the Using Department to support its recommendation for award.
PROCUREMENT : Buying, purchasing, or otherwise acquiring any goods, services, or construction. It also includes all functions that pertain to the obtaining of any goods, service, or construction, including description of requirements, selection and solicitation of sources, evaluation of offers, preparation and award of contract, dispute and claim resolution and all phases of contract administration.
PROFESSIONAL SERVICES : The services of attorneys, physicians, architects, engineers, consultants, and other recognized professional individuals, associations, corporations, and groups whose services are customarily negotiated because of the individuality of those services and level of expertise involved.
PROPOSAL : An offer binding on the offeror, in response to an RFP and a non-binding response to an REOI.
PROPOSED AWARD : A decision of the Director that a specific offeror is, after consideration of the recommendations (if any) of the Using Department, the successful offeror. This decision must be made in accordance with these regulations and initiates the process by which an award may be made to the offeror. A proposed award is not binding on the County.
PROPOSER : See Offeror.
PROTEST : A timely complaint by an offeror in connection with a perceived irregularity or impropriety with a solicitation process or responses received to a solicitation and administrative action with respect to the responses. A protest must be filed, in writing, with the Director.
PUBLIC ENTITY : A public entity is: (1) the federal, state and local governments or their agencies; (2) boards, commissions, or committees established by a federal, state, or local law; (3) government organizations or associations of the federal government, state governments, or political subdivisions of state governments; or (4) any other entity that both qualifies as a not-for-profit corporation under the provisions of the United States Internal Revenue Code and which is incorporated by one of the preceding entities for the exclusive purpose of supporting or benefiting a public entity. See Chapter 11B, Montgomery County Code.
PUBLIC NOTICE : Posting information on a bulletin board available for public inspection during regular business hours. Public notice may, as determined by the Director, also include other means reasonably calculated to notify the public and promote adequate competition such as advertisement, mailings, and placing notices in newsletters.

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QUALIFICATION AND SELECTION COMMITTEE (QSC) : A committee established by a Using Department for the purpose of evaluating responses submitted by offerors in connection with an RFP or an REOI. Each member of the QSC must be an employee of a public entity, unless specific authorization is obtained from the CAO for another to serve on the committee. The committee must be composed of at least three members.

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REQUEST FOR EXPRESSIONS OF INTEREST (REOI) : A solicitation to prospective offerors, the response to which is to be analyzed in accordance with selection criteria set forth in the solicitation. The REOI is used to develop a shortlist of prospective offerors who are eligible to receive a subsequent solicitation such as an RFP or an IFB. Requests for Expressions of Interest are generally made where specifications cannot be prepared or the availability of vendors for the goods, services, or construction involved is uncertain or unknown.
REQUEST FOR PROPOSAL (RFP) : A solicitation to prospective offerors, the response to which is analyzed in accordance with selection criteria set forth in the solicitation for the purpose of ranking the proposals received. A Request For Proposal is generally utilized (instead of an REOI) when specifications can be prepared.
REQUIREMENTS CONTRACT : A contract for goods, services, or construction covering long-term requirements (usually twelve months or more), used when the total quantity required cannot be definitely fixed, but may be stated as an estimate or within maximum and minimum limits. Delivery of goods, services, or construction are made upon issuance of a delivery order. A requirements contract may be exclusive, in which case all orders of goods, services, or construction covered by the contract must be made pursuant to it during its term. In the alternative, a requirements contract may be non-exclusive, in which case the contract should be used whenever possible, but is not the only source of goods, services, or construction covered by it. Unless a requirements contract, and the solicitation for it, states that it is an exclusive contract, it is a non-exclusive contract. A requirements contract may not be used to unduly restrict competition and may not normally be used for large construction contracts.
RESPONSIBILITY : A determination based on an offeror's reputation, past performance, business and financial capability and other factors that demonstrate the offeror is capable of satisfying the County's needs and requirements for a specific contract.
RESPONSIVE OFFEROR : An offeror who has submitted a bid which conforms in all material respects to the requirements of an IFB. The determination of whether a bid is responsive is made by the Director after appropriate consultation with the Office of County Attorney. The Director may solicit comments from the Using Department.
RESPONSIVENESS : A determination that a bid complies with the material requirements of an IFB. The Director determines if a bid is responsive. See Responsive Offeror.
RETENTION (RETAINAGE) : The withholding of a part of the payment due to the contractor until the time of final acceptance according to the terms of the contract. The amount retained (also known as retainage), as well as the period of retention, is determined by the terms of the contract. Retention, as a method of payment administration, is usually associated with construction contracts.

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SALIENT CHARACTERISTICS : Characteristics of a particular referenced good (product) or service necessary to meet the minimum valid needs of government as determined by the County.
SCOPE (SCOPE OF CONTRACT) : The entire subject matter of a contract in terms of goods to be delivered or services or construction to be performed under the contract. Scope includes all contract terms, conditions, and specifications. The scope of a contract determines whether an alteration to the contract work may be accomplished by change order or by contract amendment. Scope also includes "scope of services", if appropriate, which defines the work to be accomplished under the contract.
SERVICES : The performance of an identifiable task by furnishing labor, time or effort by a contractor, not involving the delivery of a specific end product other than reports which are merely incidental to the required performance.
SHORTLIST : A limited number of offerors who, through a pre-qualification process, are qualified (usually through an REOI) to participate in a further evaluation and/or negotiation process for award of one or more contracts.
SMALL PURCHASE : An informal solicitation of goods, construction or non-professional services valued below a certain threshold.
SOLE SOURCE : A procurement in which goods, services, or construction necessary to meet minimum valid needs of the County are available from only one person or firm as provided in Chapter 11B of the County Code including those having the exclusive right to manufacture, sell or otherwise market certain goods or services.
SOLICITATION : A process for requesting submittal of offers through either a formal communication, which may include an IFB, RFP or REOI, or an informal communication, such as telephone communication and other forms of communication with potential offerors as specifically authorized under these regulations. A solicitation may only be issued by a contracting officer or an authorized government official.
SPECIFICATION : A concise statement of a set of requirements to be satisfied by the goods, services, or construction which the County wishes to acquire. A specification must indicate, whenever appropriate, the procedure by which requirements are determined to be satisfied. As far as practicable, it is desirable that the requirements be expressed in numerical or other objective terms, together with their ranges or limits. A specification may be a standard, a part of a standard, or independent of a standard. It may also be expressed as an end result. Specifications should be contained in solicitations as well as contracts. Specifications should not be overly restrictive or prejudicial to competition beyond that justified by minimum valid requirements of the County.
STANDARDIZED PROCUREMENTS : A standardized procurement is a purchase of equipment or parts for which the CAO determines standardization and interchangeability of parts is necessary or is in the public interest. A standardized procurement should include competition when reasonably available. Standardization approval must be for a stated period which bears a reasonable relationship to the life of the equipment and the specialized training or specialized equipment necessary to maintain the standardized item. A standardization decision includes the decision to procure compatible parts, equipment, maintenance and training.
SUBCONTRACT : An agreement entered into between a third party (known as a subcontractor) and a contractor who has a contract with the County (known as a prime contractor). Although the County is not a party to the subcontract, and the prime contractor is fully responsible for the subcontractor, the County may have certain control over the subcontract and subcontractor through the provisions of the prime contract.

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TERMINATION FOR CONVENIENCE : A mandatory clause that provides for termination of all or part of a contract by a contracting officer if the contracting officer determines that termination is in the best interest of the County. Upon such termination, the Director may entertain contractors' claims for work accomplished or costs incurred up to the date of termination for convenience and process this claim in accordance with law and regulations.
TERMINATION FOR DEFAULT : A mandatory clause that provides for the cancellation in whole or in part of a contract, at the option of the County, because of the contractor's failure to perform. A termination for default may be accomplished by the Director in accordance with the terms of the contract after consultation with the Office of the County Attorney. A termination clause should provide for liability of the contractor for additional costs to the County in connection with procurement of substitute performance from replacement contractors. A termination for convenience may be added in the alternative to the notice of termination for default to provide that in the event that the termination for default is not sustained, the contract is terminated for convenience as of the date specified in the termination for default notice.
TESTING : A phase of inspection involving the determination by technical means of the physical and chemical properties of items, or components thereof, requiring not so much the element of personal judgment as the application of recognized and established scientific principles and procedures. This process is part of the determination of whether goods, services, or construction should be accepted.

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UNSOLICITED PROPOSAL : An offer from an offeror proposing to render services or construction or deliver goods to the County, outside of a solicitation by the County. Unsolicited proposals should be evaluated by an appropriate Using Department in terms of need, price, and funds available. If funds are available and need is present, the Using Department may initiate an appropriate solicitation as provided by these regulations, based upon the unsolicited proposal.
USING DEPARTMENT : Any County department, office or agency subject to the procurement requirements imposed under Chapter 11B, Montgomery County Code.

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WAIVER : A variance from the requirements of the procurement regulations that is authorized by the CAO. A waiver may be granted for a single procurement or a class of procurements. A waiver may be granted only after a written determination and finding by the CAO.
WARRANTY : A representation that something is true, created either by express words or actions or implied either by the circumstances or commercial usages. It includes any affirmation of fact or promise made by a contractor or offeror which relates to goods, services, and construction and becomes part of the basis of the bargain. This may consist of a description of the goods made part of the contract which indicates an express warranty that the goods must conform to the description and samples or models; such a description creates an express warranty that the goods to be delivered must conform to the sample or model. When goods, services, or construction fail to conform to the terms of the express or implied warranty, a breach of warranty, and thus a breach of contract, exists for which the County has contractual remedies including termination for default.